A Harvard Business School alumnus argues that the brand of business taught today at his alma mater and elsewhere needs a serious overhaul.
Earlier this month, Michael Moore's new movie, "Capitalism: A Love Story," spooled out in theaters nationwide. Like most of Moore's films, it will likely do well -- spectacularly so for a documentary.
It will also likely stoke the Main Street sentiment that Wall Street is a den of iniquity or even something worse.
Where did top CEOs go to college?
The truth is, sadly, more complex, but it boils down to this: Harvard Business School is to blame. Not solely and specifically HBS, but HBS as representative of business's best thinking and the preferred finishing school for the American System of Free Enterprise. Our best and brightest did it.
Harvard Business School led the charge away from an approach to business centered on relationships and commerce and toward one rooted in markets and competition. It promised us competitive advantage and efficiency, and it delivered.
But those benefits came at a cost. The cost included a Hobbesian view of business -- nasty, brutish and every man for himself -- and a rejection of the idea that ultimately we're all in this together. Which is precisely what we do not need at this time of increasing global interdependence.
How did this happen?
In 2006, I attended my 30-year reunion at Harvard Business School. A few things had changed visibly. More from MSN Money and BusinessWeek5 steps to losing your moneyHigh-priced CEOs: Worth the money?Why saving is for suckersMBA pay: Who earns whatWhy stocks are surging as jobs disappearMBA pay: Riches for some, not for allThe fading role of experience In the mid-1970s, HBS viewed itself, and was viewed, as graduating leaders of industry. Management consulting and investment banking together were the hot new segments, but they still employed only about a quarter of total new graduates (a proportion that roughly doubled over the next few decades).
The curriculum had a limited number of courses. Faculty members, many with significant business experience, took pride in referencing concepts across courses.
Most cases (remember, HBS uses the case method of instruction) personalized the manager's role. They'd begin with "As Joe gulped down his first coffee, he pondered the situation of . . . " and ended with "What should Joe do? What would you do?"
For three cases a day, five days a week, for two years, this was the intensely pragmatic approach HBS taught us: What is the problem, and what should Joe/you do about it?
Today, HBS offers many more courses. There is less cross-referencing, so the experience is less integrated. Faculty members are more likely to be professional academics. Fewer have degrees in business, and they are less likely to have business experience.
But most interestingly, Joe is reportedly gone from the cases. In his place? Structural analyses of competitive dynamics and business redesign through markets and outsourcing. Growing focus on competition Joe's absence reflects the two major intellectual trends of our time: a view of strategy as competition (think sustainable competitive advantage) and a view of business as optimizing systems (think business process re-engineering and outsourcing).
The competitive view literally redefined suppliers and customers as subcategories of competitors. So we learned to compete with our customers. The process view replaced markets with organizations. So we now outsource human resources in the name of efficiency (and, tellingly, speak of employees as "human capital").
Video: Why Harvard deserves the blame
Harvard Business School was a leader in the New Strategy thinking and a significant participant in the Business Process movement. This view of business is less about commerce, more about competition; less about managers, more about management; less about relationships, more about systems and processes.
In this worldview, "business ethics" is an oxymoron, not because of bad behavior but because ethics can't even exist apart from some notion of a "relationship" to something or someone else. Subordinating everything to shareholder value is, literally, anti-ethical. Mortgages gone wild One example is the mortgage industry. It was completely redesigned since the 1980s along good HBS guidelines -- to maximize efficiency, lower costs and increase liquidity. Collateral damage: no relationships, skewed incentives, incompetent regulation and greed run amok.
Meanwhile, the world is moving in precisely the opposite direction. The salient fact of business nowadays is that it's all connected. In a connected world, a focus on competitive relationships is no longer useful. What we need are connectivity, trust, and collaboration. And it starts with the way we think. Which means Harvard and other business schools have a huge obligation to correct their teachings.
Where's a good place to start? We could do worse than to bring back Joe.
Charles H. Green is the founder of TrustedAdvisor Associates and a co-author of "The Trusted Advisor." He is a 1976 graduate of Harvard Business School.
Check another?
I got an idea. All Harvard professors must have been owners or a CEO's of successful business, period. How could you teach other to run one if you never did. Can you teach other to swim if you never did?
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